ISLAMABAD: Provinces have agreed to provide an additional share of the National Finance Commission (NFC) resources to the federal government, with the transferred funds expected to be used for strategic expenditures, according to sources in the Ministry of Finance.
Officials said Punjab and Sindh will contribute extra revenue to the federal government based on next fiscal year’s tax collection targets. However, they clarified that there will be no change in the existing NFC formula for the distribution of national revenues.
Sources added that the federal government will allocate funds to the provinces based on the current fiscal year’s tax target. For the upcoming financial year, the overall tax target has been set at Rs15,264 billion.
Compared to the current year, the tax target reflects an increase of Rs2,259 billion. The federal government is also expected to return the grant amount to provinces over the coming years.
Under the proposed arrangement, Punjab may contribute around Rs600 billion, while Sindh’s contribution is estimated at approximately Rs310 billion. Khyber Pakhtunkhwa has also reportedly been requested to receive grants from the federal government.
Sources further said that discussions between the technical committee, chaired by Deputy Prime Minister and Foreign Minister Ishaq Dar, and the Pakistan Peoples Party (PPP) have been successful, paving the way for the agreement.
